EXHIBIT 10.2
DOVER SADDLERY, INC.
INCENTIVE STOCK OPTION AGREEMENT
This Incentive Stock Option Agreement ("Agreement") is made and entered
into as of the date set forth in Section l(a) below, by and between Dover
Saddlery, Inc., a Delaware corporation (the "Corporation"), and the employee of
the Corporation named in Section 1 (b) ("Optionee").
In consideration of the covenants set forth in this Agreement, the parties
agree as follows:
1. OPTION INFORMATION
(a) Date of Option:
(b) Optionee:
(c) Number of Shares:
(d) Exercise Price:
2. ACKNOWLEDGMENTS
(a) Optionee is an employee of the Corporation.
(b) The Board of Directors (the "Board," which term shall include an
authorized committee of the Board of Directors) and shareholders of the
Corporation have heretofore adopted a 1999 Stock Option Plan (the "Plan"),
pursuant to which this Option is being granted.
(c) The Board has authorized the granting to Optionee of an Incentive
Stock Option ("Option") as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, (the "Code") to purchase shares of Class A
Common Stock of the Corporation ("Stock") upon the terms and conditions
hereinafter stated and pursuant to an exemption from registration under
the Securities Act of 1933, as amended (the "Securities Act"), provided by
Rule 701 thereunder.
3. SHARES; PRICE
The Corporation hereby grants to Optionee the right to purchase, upon and
subject to the terms and conditions herein stated, the number of shares of
Stock set forth in Section 1 ( c) above (the "Shares") for cash (or other
consideration as is authorized under the Plan and acceptable to the Board,
in their sole and absolute discretion) at the price per Share set forth in
Section led) above (the "Exercise Price"), such price being not less than
the fair market value per share of the Shares covered by this Option as of
the date of this Option as set forth
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in Section l(a) above (unless Optionee is the owner of Stock possessing
more than ten percent (10%) of the total voting power or value of all
outstanding Stock of the Corporation ("Ten Percent Holder"), in which case
the Exercise Price shall be not less than one hundred ten percent (110%)
of the fair market value of such Stock).
4. TERM OF OPTION; CONTINUATION OF EMPLOYMENT
This Option shall expire, and all rights hereunder to purchase the Shares
shall terminate, ten (10) years from the date hereof. This Option shall
earlier terminate subject to Sections 7 and 8 of this Agreement upon, and
as of the date of, the termination of Optionee's employment if such
termination occurs prior to the end of the ten (10) year period beginning
with the date hereof. Nothing contained in this Agreement shall confer
upon Optionee the right to the continuation of his or her employment by
the Corporation or to interfere with the right of the Corporation to
terminate such employment or to increase or decrease the compensation of
Optionee from the rate in existence at the date hereof.
5. VESTING OF OPTION
Subject to the provisions of Sections 7 and 8 of this Agreement, this
Option shall become exercisable during the term of Optionee's employment
in accordance with the following vesting schedule:
This Option shall be exercisable in five (5) equal annual installments of
twenty percent (20%) of the Shares covered by this Option, the first
installment to be exercisable on the first anniversary of the date of this
Option, with an additional twenty percent (20%) of the Shares becoming
exercisable on each of the four successive anniversary dates; PROVIDED
HOWEVER that Optionee may only exercise this Option with respect to a
particular installment if the Corporation has met or exceeded the EBITDA
(earnings before interest, taxes, depreciation, and amortization) budget
established by the Board for the most recent fiscal year ended prior to
the applicable exercise date for such installment. The Board in its
discretion shall establish the annual EBITDA budgets, and may adjust such
budgets for any extraordinary transactions (e.g., acquisitions). The
installments shall be cumulative (e.g., this option may be exercised as to
any or all Shares covered by an installment at any time or times after an
installment becomes exercisable and until expiration or termination of
this option).
6. EXERCISE
This Option shall be exercised by delivery to the Corporation of (a)
written notice of exercise stating the number of Shares being purchased
(in whole shares only) and such other information set forth on the form of
Notice of Exercise attached hereto as Appendix A, (b) a check or cash in
the amount of the Exercise Price of the Shares covered by the
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notice (or such other consideration as has been approved by the Board of
Directors consistent with the Plan) and (c) a written investment
representation as provided for in Section 13 of this Agreement. This
Option shall not be assignable or transferable, except by will or by the
laws of descent and distribution, and shall be exercisable only by
Optionee during his or her lifetime, except as provided in Section 8 of
this Agreement.
7. TERMINATION OF EMPLOYMENT
If Optionee shall cease to be employed by the Corporation for any reason,
whether voluntarily or involuntarily, other than by his or her death,
Optionee (or if the Optionee shall die after such termination, but prior
to such exercise date, Optionee's personal representative or the person
entitled to succeed to the Option) shall have the right at any time not
less than thirty (30) days nor more than three (3) months following such
termination of employment or the remaining term of this Option, whichever
is the lesser, to exercise in whole or in part this Option to the extent,
but only to the extent, that this Option was exercisable as of the date of
termination of employment and had not previously been exercised; provided,
however:
(i) If Optionee is permanently disabled (within the meaning of Code
Section 22(e)(3)) at the time of termination, the foregoing period of
limited exercise rights shall be modified to be not less than thirty
(30) days and not more than one (1) year following termination; or
(ii) If Optionee is terminated for "Cause" as that term is defined by
the terms of the Plan or this Agreement or by any employment agreement
between the Optionee and the Corporation, this Option shall
automatically terminate as to all Shares covered by this Option not
exercised prior to termination.
Unless earlier terminated, all rights under this Option shall terminate in
any event on the expiration date of this Option as defined in Section 4 of
this Agreement.
8. DEATH OF OPTIONEE
If the Optionee shall die while in the employ of the Corporation,
Optionee's personal representative or the person entitled to Optionee's
rights hereunder may at any time within six (6) months after the date of
Optionee's death, or during the remaining term of this Option, whichever
is the lesser, exercise this Option and purchase Shares to the extent, but
only to the extent, that Optionee could have exercised this Option as of
the date of Optionee's death; provided, in any case, that this Option may
be so exercised only to the extent that this Option has not previously
been exercised by Optionee.
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9. NO RIGHTS AS SHAREHOLDER
Optionee shall have no rights as a shareholder with respect to the Shares
covered by any installment of this Option until the effective date of
issuance of Shares following exercise of this Option, and no adjustment
will be made for dividends or other rights for which the record date is
prior to the date such stock certificate or certificates are issued except
as provided in Section 10 of this Agreement.
10. RECAPITALIZATION
Subject to any required action by the shareholders of the Corporation, the
number of Shares covered by this Option, and the Exercise Price thereof,
shall be proportionately adjusted for any increase or decrease in the
number of issued shares resulting from a subdivision or consolidation of
shares or the payment of a stock dividend, or any other increase or
decrease in the number of such shares effected without receipt of
consideration by the Corporation; provided however that the conversion of
any convertible securities of the Corporation shall not be deemed to have
been "effected without receipt of consideration by the Corporation."
In the event of a proposed dissolution or liquidation of the Corporation,
a merger or consolidation in which the Corporation is not the surviving
entity, or a sale of all or substantially all of the assets or capital
stock of the Corporation (collectively, a "Reorganization"), unless
otherwise provided by the Board, this Option shall terminate immediately
prior to such date as is determined by the Board, which date shall be no
later than the consummation of the Reorganization. In such event, if the
entity which shall be the surviving entity does not tender to Optionee an
offer, having no obligation to do so, to substitute for any unexercised
Option a stock option or capital stock of the surviving entity, as
applicable, which on an equitable basis shall provide the Optionee with
substantially the same economic benefit as such unexercised Option, then
the Board may grant to such Optionee, in the Board's sole and absolute
discretion and without obligation, the right for a period commencing
thirty (30) days prior to and ending immediately prior to the date
determined by the Board pursuant hereto for termination of the Option or
during the remaining term of the Option, whichever is the lesser, to
exercise any unexpired Option or Options without regard to the installment
provisions of Section 5; provided, however, that such exercise shall be
subject to the consummation of the Reorganization.
Subject to any required action by the shareholders of the Corporation, if
the Corporation shall be the surviving entity in any merger or
consolidation, this Option thereafter shall pertain to and apply to the
securities to which a holder of Shares equal to the Shares subject to this
Option would have been entitled by reason of such merger or consolidation,
and the installment provisions of Section 5 shall continue to apply.
To the extent that the foregoing adjustments relate to shares or
securities of the Corporation, such adjustments shall be made by the
Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided in this Agreement, Optionee shall
have no rights by reason of any subdivision or consolidation of
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shares of Stock of any class or the payment of any stock dividend or any
other increase or decrease in the number of shares of stock of any class,
and the number and price of Shares subject to this Option shall not be
affected by, and no adjustments shall be made by reason of, any
dissolution, liquidation, merger, consolidation or sale of assets or
capital stock, or any issue by the Corporation of shares of stock of any
class or securities convertible into shares of stock of any class.
The grant of this Option shall not affect in any way the right or power of
the Corporation to make adjustments, reclassifications, reorganizations or
changes in its capital or business structure or to merge, consolidate,
dissolve or liquidate or to sell or transfer all or any part of its
business or assets.
11. ADDITIONAL CONSIDERATION
Should the Internal Revenue Service determine that the Exercise Price
established by the Board as the fair market value per Share is less than
the fair market value per Share as of the date of Option grant, Optionee
hereby agrees to tender such additional consideration, or agrees to tender
upon exercise of all or a portion of this Option, such fair market value
per Share as is determined by the Internal Revenue Service.
12. MODIFICATION, EXTENSION AND RENEWAL OF OPTIONS
The Board or Committee, as described in the Plan, may modify, extend or
renew this Option or accept its surrender (to the extent not yet
exercised) and authorize the granting of a new option in substitution for
it (to the extent not yet exercised), subject at all times to the Plan,
Code Section 422 and applicable law. Notwithstanding the foregoing
provisions of this Section 12, no modification shall, without the consent
of the Optionee, alter to the Optionee's detriment or impair any rights of
Optionee under this Agreement.
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13. INVESTMENT INTENT; RESTRICTIONS ON TRANSFER
(a) Optionee represents and agrees that if Optionee exercises this Option
in whole or in part, Optionee will in each case acquire the Shares upon
such exercise for the purpose of investment and not with a view to, or for
resale in connection with, any distribution thereof; and that upon the
exercise of this Option in whole or in part, Optionee (or any person or
persons entitled to exercise this Option under the provisions of Sections
7 and 8 of this Agreement) shall furnish to the Corporation a written
statement to such effect, satisfactory to the Corporation in form and
substance. If the Shares represented by this Option are registered under
the Securities Act, either before or after the exercise of this Option in
whole or in part, the Optionee shall be relieved of the investment
representation and agreement and shall not be required to furnish the
Corporation with the written statement.
(b) Optionee further represents that Optionee has had access to the
financial statements or books and records of the Corporation, has had the
opportunity to ask questions of the Corporation concerning its business,
operations and financial condition, and to obtain additional information
reasonably necessary to verify the accuracy of such information.
(c) Unless and until the Shares represented by this Option are registered
under the Securities Act, all certificates representing the Shares and any
certificates subsequently issued in substitution therefor and any
certificate for any securities issued pursuant to any stock split, share
reclassification, stock dividend or other similar capital event shall bear
legends in substantially the following form:
"THESE SECURITIES HA VB NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER
THE SECURITIES ACT OF 1933 (THE "SECURITIES ACT") OR UNDER THE APPLICABLE
SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST
THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE
SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM."
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO
THAT CERTAIN INCENTIVE STOCK OPTION AGREEMENT DATED [date] BETWEEN THE
CORPORATION AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES
AND MAY SUBJECT THE SHARES TO REPURCHASE BY THE CORPORATION UNDER CERTAIN
CONDITIONS."
The certificates shall bear such other legend or legends as the
Corporation and its counsel deem necessary or appropriate. Appropriate
stop transfer instructions with respect to the Shares have been placed
with the Corporation's transfer agent.
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14. EFFECTS OF EARLY DISPOSITION
Optionee understands that if an Optionee disposes of shares acquired
hereunder within two (2) years after the date of this Option or within one
(1) year after the date of issuance of such shares to Optionee, the
Optionee will be treated for income tax purposes as having received
ordinary income at the time of the disposition of an amount generally
measured by the difference between the purchase price and the fair market
value of such stock on the date of exercise, subject to adjustment for any
tax previously paid, in addition to any tax on the difference between the
sales price and Optionee's adjusted cost basis in such shares. The
foregoing amount may be measured differently if Optionee is an officer,
director or Ten Percent Holder of the Corporation. Optionee agrees to
notify the Corporation within ten (10) working days of any such
disposition.
15. STAND-OFF AGREEMENT
Optionee agrees that in connection with any registration of the
Corporation's securities under the Securities Act, and upon the request of
the Corporation or any underwriter managing an underwritten offering of
the Corporation's securities, Optionee shall not sell, short any sale of,
loan, grant an option for, or otherwise dispose of any of the Shares
(other than Shares included in the offering) without the prior written
consent of the Corporation or such managing underwriter, as applicable,
for a period of at least one (1) year following the effective date of
registration of the offering.
16. NOTICES
Any notice required to be given pursuant to this Option or the Plan shall
be in writing and shall be deemed to be delivered upon receipt or, in the
case of notices by the Corporation, five (5) days after deposit in the
U.S. mail, postage prepaid, addressed to Optionee at the address last
provided to the Corporation by Optionee for his or her employee records.
17. AGREEMENT SUBJECT TO PLAN; APPLICABLE LAW
This Option is made pursuant to the Plan and shall be interpreted to
comply with it. A copy of the Plan is available to Optionee, at no charge,
at the principal office of the Corporation. Any provision of this Option
inconsistent with the Plan shall be considered void and replaced with the
applicable provision of the Plan. The interpretation and enforcement of
this Option shall be governed by the laws of the State of Delaware.
In witness whereof, the parties hereto have executed this Option as of the
date set forth in Section l(c) above.
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DOVER SADDLERY, INC.
By:________________________
Its:_______________________
OPTIONEE
___________________________
Signature
___________________________
Name
APPENDIX A
NOTICE OF EXERCISE OF STOCK OPTION DOVER
SADDLERY, INC.
RE: INCENTIVE STOCK OPTION
Notice is hereby given pursuant to Section 6 of my Incentive Stock Option
Agreement that I elect to purchase the number of shares set forth below at the
exercise price set forth in my option agreement:
Incentive Stock Option Agreement dated:
Number of shares being purchased:
Exercise Price:
A check in the amount of the aggregate price of the shares being purchased
is attached.
I hereby confirm that the shares are being acquired by me for my own
account for investment purposes, and not with a view to, or for resale in
connection with, any distribution thereof. I will not sell or dispose of my
Shares in violation of the Securities Act of 1933, as amended, or any applicable
federal or state securities laws.
I understand that the certificate representing the Option Shares will bear
a restrictive legend within the contemplation of the Securities Act and as
required by such other state or federal law or regulation applicable to the
issuance or delivery of the Option Shares.
I agree to provide to the Company such additional documents or information
as may be required pursuant to the Company's 1999 Incentive and Nonstatutory
Stock Plan.
Signature of Optionee
Name of Optionee
Dated: _____________________
